The IRS sends out a lot of letters, and each letter, though it appears routine because it usually comes preprinted by a computer, also has a computer code. Some of those computer codes indicate the IRS is about to make trouble.
You are headed for trouble if your letter has the computer code 1058.
Letter 1058 is the final attempt by the IRS before the IRS starts seizing your assets. If you get a letter 4458C, for example, it means you have missed payments in your payment plan with the IRS, and it gives you time to get back on track. But letter 1058 is serious; if you ignore it, the IRS can seize your personal assets to settle your tax debt.
What You Can Do About Letter 1058
If you are sent letter 1058 (look at the code in the upper right-hand corner), don’t ignore it because you need to take action immediately. You could, for example, pay off your balance immediately; this is the quickest way to settle your issues with the IRS and possibly limit your tax debt. Once your bill is paid, the IRS will stop contacting you.
But if you can’t pay off your tax bill, even if you sent the IRS some money, it will start to reduce the interest and penalties that are adding up on your account. You might also be able to start or resume a payment plan and that will stop the IRS from seizing your assets, including your home and car. The fastest way to set up a payment plan is to go to the IRS website and follow the instructions for setting up a payment plan. You can also send a payment plan application by snail mail — but remember, the IRS is overwhelmed with a backlog of mail. You can also call them on the phone — but you’ll probably wait for hours to speak with someone.
$50,000 Is A Magic Number
Remember the figure of $ 50 thousand because that’s a magic number when dealing with the IRS. If you owe less than $50,000, your acceptance of a payment plan is almost automatic. Almost automatic because there might be some hangups; discuss these with your tax professional. But you should have clear sailing.
If you owe more than $50,000, you might be able to get into a payment plan by paying down the amount you owe to under $50 thousand. Or, you may need a tax professional to discuss your other options.
Meanwhile, the IRS has its options, including wage garnishments, seizure of assets and liens on your property, and even taking money from your bank accounts, state tax refunds, and Social Security payments.
Your Other Options
You have other options, and the first is to always talk to a tax professional to get their guidance. You can also write to the IRS if you feel the IRS is wrong about you owing money, and you can file an appeal. But talking to a tax professional is something you should not delay, and you should do that as soon as Letter 1058 shows up. If necessary, your tax professional may have you consider the Fresh Start Initiative or Offer In Compromise Program.